Playboy Freer Online, More Restrained in Print

Mag Cuts Circ 13% as It Tries to Keep Up With 'Revolution'

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It's not easy for magazine publishers to set priorities in this tilting media landscape, where print advertising brings top dollar but web audiences grow fastest. Playboy -- a title whose content falls squarely into a category that people will still pay real money for online -- is undertaking what some would call a risky strategy: reducing its paid print circulation while at the same time trying to attract an online audience that wants free content.
The Playboy plan: Cut circulation, push free web content to up online ad revenue.
The Playboy plan: Cut circulation, push free web content to up online ad revenue.

Instead of obsessing over retaining print readers and trying to sell content online, as in the past, Playboy's brand managers will now try to expand its reach wherever that may be. Plenty of publishers have proclaimed similar philosophies, of course, but the tough practical choices involved lend Playboy some extra credibility. As part of its reorientation, Playboy is slashing its paid circulation to 2.6 million from 3 million, a 13% reduction, effective with the January issue. That will compound a cut of nearly 5% just two years earlier.

"We have a very strong print product, but there is a revolution that is taking place around us," said Bob Meyers, president of the media group at Playboy Enterprises. "There is a very dramatic change in the way the consumer is consuming media."

Media buyers once saw falling rate base as a sign of weakness. Now many say downsizing is shrewd.

"My sense is they're accepting reality, which is fantastic," said Rishad Tobaccowala, president of Denuo Group, a Publicis Groupe unit devoted to emerging media. "Magazines have tended to fixate and look at everything through their distribution window. They thought about the magazine, the physical thing."

For many titles, that strategy has become outdated. As maintaining big circulation has gotten more expensive and less rewarding, publishers have stripped millions of copies from sales guarantees at magazines as diverse as Reader's Digest, Time, Woman's Day, TV Guide, BusinessWeek and even Star magazine, the only celebrity weekly to ever reduce rate base.

Despite a raft of shutdowns from Premiere to Child to Jane, most magazines aren't going away. The business is just being redefined. "No one is going to be in the magazine business," Mr. Tobaccowala predicted. "They're going to be in the content business, of which magazines will be one component."

Tear down this walll
While Playboy shrinks its print presence, it's also retooling its website to better coordinate editorial and ad sales with print. Until a redesign last week, was set up to point surfers toward content that lived behind a pay wall, hoping to continue a print model that required subscriptions. But like The New York Times Online, which demolished the two-year-old pay walls around its columnists Sept. 19, Playboy has decided to prioritize traffic and the ad revenue its growth should attract by featuring more of the content on its site's home page that viewers can get free.

"We were myopic in creating a gateway that would drive people into a pay area," Mr. Meyers said. "We didn't take full advantage of the fact that there are many other dimensions of the Playboy experience online. There wasn't as robust an online ad business then as there is now. There wasn't the sophistication and the widgets that could help us create a community today."

Andrew Swinand, president-chief client officer at Starcom USA, said he supported Playboy's new path -- despite the pain involved. "The challenge is right now the financials on online don't make up for the financials in print," he said.
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